There’s been a lot of speculation in the mortgage industry lately about how hurricanes Harvey and Irma might affect delinquencies and defaults in Texas and Florida – not to mention mortgage originations and home sales.
A high percentage of the homes in the area were already underwater in terms of loan-to-value. What’s not known is how many of these underwater borrowers might attempt to walk away from their investment.
A report from ATTOM Data Solutions shows that the rate of foreclosure was on the rise in the Houston area before Harvey even hit.
According to the firm’s Foreclosure Market Report, foreclosure starts in the Houston area had increased 28%, year over year, as of August.
That’s counter to the national trend of foreclosure starts declining 19% during the same 12- month period.
During that period, nearly 5,000 Houston-area homes started the foreclosure process, according to the report.
In addition, foreclose filings, including both starts and completions, were completed on 75,115 properties nationwide in August, an increase of 14% compared with an all-time low in July, but still down 21% from a year earlier.
States that saw year-over-year increases in foreclosure activity in August included Alaska (up 100%); Wyoming (up 79%); DC (up 67%); Louisiana (up 59%); Vermont (up 12%); and Mississippi (up 9%).
Of course, this needs to be viewed in context: Delinquencies and defaults have on the decline nationwide for years now and are currently near pre-crisis lows.
“There is often a seasonal monthly increase in foreclosure activity in August paralleling the seasonal slowdown in the overall real estate market, but the 14 percent month-over-month increase nationwide this August is more than twice the average six percent seasonal increase in August over the previous 10 years – the highest in fact since a 37 percent month-over-month increase in August 2007,” says Daren Blomquist, senior vice president at ATTOM Data Solutions, in a statement. “While this seasonal increase is certainly not enough to set off alarm bells nationwide, especially given that foreclosure activity was down annually for the 23rd consecutive month in August, there is cause for concern in a few local markets where foreclosure activity has consistently been trending higher on an annual basis this year.”
In addition, it should be noted that government-sponsored enterprises Fannie Mae and Freddie Mac have disaster relief plans in place giving borrowers with properties located in FEMA-declared disaster areas forbearance, provided that they are eligible for FEMA Individual Assistance.
